Economy

(Reuters) – The U.S. government will spend more than $500 billion on climate technology and clean energy over the next decade under three recently enacted laws, an analysis by non-profit RMI found. The tally is based on this month’s Inflation Reduction and CHIPS acts and last year’s Infrastructure Investment and Jobs Act. Together they fund climate-related research and pilot studies and support manufacturing.”Together they form a coherent green industrial policy, in the sense that there are strategic industries that they focus on and a set of tools designed to accelerate production up and down the supply chain,” said Lachlan Carey, co-author of the report, published on Monday.The estimated $514 billion total includes $362 billion from the IRA, $98 billion from the infrastructure act and $54 billion from the bipartisan-supported CHIPS law, although Congress will have to pass further legislation for some of the funding to be released. The analysis excludes additional agriculture and land-related climate spending.The CHIPS bill, for instance, will fund climate-related efforts in materials science such as developing new battery chemistry and more efficient solar panels.Annual federal spending on climate and clean energy over the next five years will be roughly 15 times that of the 1990s and early 2000s and about triple that of recent years, the study said.U.S. government estimates show renewable energy is becoming a bigger part of production.But study authors said climate action needed to speed up.”It’s a long process that we don’t have time to be that long. Like solar and wind took 40 years – we have 10 years,” said Jun Shepard, another co-author. More

Good morning. As the six-month mark of President Vladimir Putin’s invasion of Ukraine approaches later this week, a senior Russian diplomat has told the Financial Times that Moscow sees no possibility of a diplomatic solution to end the war and expects a long conflict.Gennady Gatilov, Russia’s permanent representative to the UN in Geneva, said the UN should be playing a bigger role in attempts to end the conflict and accused the US and other Nato countries of pressing Ukraine to walk away from negotiations. There would be no direct talks between Putin and Ukraine’s president Volodymyr Zelenskyy, he added. “Now, I do not see any possibility for diplomatic contacts,” Gatilov said. “And the more the conflict goes on, the more difficult it will be to have a diplomatic solution.” Gatilov’s comments come as tension between Moscow and Kyiv rises following the murder of a prominent Russian journalist over the weekend.Daria Dugina, daughter of far-right nationalist philosopher Alexander Dugin, was killed when a car she was driving exploded in a suburb 20km west of Moscow. The car belonged to her father, a prominent academic and supporter of Vladimir Putin’s invasion of Ukraine. Supporters of the Russian president blamed Ukraine for the attack and called for reprisals against Kyiv. Zelenskyy warned on Saturday that Russia may be preparing “something particularly nasty” ahead of Wednesday, which marks six months since Russia’s full invasion of Ukraine and the country’s independence day.Thank you for reading FirstFT Americas. Have a great week — GordonFive more stories in the news1. Cineworld confirms possible US bankruptcy filing The world’s second-largest cinema chain has confirmed it is looking at options to rescue its debt-laden business, including “a possible voluntary Chapter 11 filing”. Cineworld shares tumbled last week after it said admissions were “below expectations” and it was considering a potential restructuring of its balance sheet.2. China intensifies measures to deal with heatwave Sweltering temperatures are not just affecting Americans and Europeans this summer. China has been experiencing a months-long heatwave that has emptied rivers and dams and forced cities to dim lights. Temperatures yesterday in Chengdu, capital of the south western province of Sichuan, reached a high of 43.4C.3. World’s largest sovereign wealth fund says cyber security is its top concern Hacking has eclipsed tumultuous financial markets as the biggest concern for Norges Bank Investment Management, Norway’s $1.2tn oil fund, as it faces an average of three “serious” cyber attacks each day, according to chief executive Nicolai Tangen.4. Apple employees push back against return-to-office order A group of workers at the iPhone maker have signed a petition demanding “location flexible work” following chief executive Tim Cook’s order last week that employees in and around the Cupertino headquarters return to the office three days a week from September 5.5. PwC sued by auditor after ‘pub golf’ brain injury The Big Four firm is being sued by an auditor who claims he suffered a serious head injury after attending a celebratory work event that involved an “excessive” drinking game of “pub golf”.The day aheadUS markets expected to open lower Shares on Wall Street are expected to follow Europe and open lower later today. Worries that Europe’s largest economies will slide into recession are weighing on equity markets across the region and have dragged the euro back to parity with the dollar.Corporate earnings Zoom Video Communications, a corporate success story during the pandemic, is expected to report a fall in earnings as a weakening economy and back-to-the-office trends hit demand for its services. US and South Korea launch war games South Korea and the US begin their first large-scale joint military exercises in four years today. The manoeuvres come amid growing tensions over North Korea’s nuclear weapons programme and regional concerns about the future of Taiwan.What else we’re readingWhy Biden is taking on private equity The influence of buyout groups on US industry has never been greater. But the antitrust landscape is changing after years of lenient policy, with regulatory agencies under President Joe Biden’s administration seeking to crack down on private equity and prevent it from “rolling up” vast chunks of American business.Anxious US consumers carry on spending regardless The University of Michigan’s index of consumer sentiment suggests US consumers are more gloomy now than during the depths of the Covid-19 pandemic, the global financial crisis or any other moment since the series began in 1952. Yet this pessimism is not showing up in the sales story being told by Walmart and other retailers. Why has sentiment become a less reliable guide to spending? Andrew Edgecliffe-Johnson explains. How a 20-year-old student made $110mn riding the meme stock wave He may not have succeeded in his bid to become the youngest US president at the age of 18, but last week Jake Freeman emerged as one of the youngest investors to generate a nine-figure windfall by trading the meme stock frenzy.Soaring fertiliser prices threaten to spark Africa food crisis The price of nitrogen-based fertilisers has hit record highs in line with natural gas costs in the wake of the war in Ukraine. Growers have cut usage in response, threatening to reduce food production and deepen a global food crisis and raising the prospect of social unrest on the continent.Why staff are being sent to bond with nature According to a recent global survey, most workers are unable to explain their own companies’ climate commitments. Could environmental retreats — from sleeping in the woods to hugging trees — solve the disconnect?TravelBrickell is Miami’s frenetic financial district and one of the fastest-growing destinations in the city. Enuma Okoro recently spent some time there sampling its deliciously diverse cuisine. Enuma recommends her four favourite eateries. More

LONDON (Reuters) – British consumer price inflation is set to peak at 18% – nine times the Bank of England’s target – in early 2023, an economist at U.S. bank Citi said on Monday, raising his forecast once again in the light of the latest jump in energy prices.”The question now is what policy may do to offset the impact on both inflation and the real economy,” Benjamin Nabarro said in a note to clients.Consumer price inflation was last above 18% in 1976.The front-runner to become Britain’s next prime minister, Liz Truss, was likely to come up with measures to support households that would have a limited offsetting impact on headline inflation, Nabarro said.With inflation now set to peak substantially higher than the Bank of England’s 13% forecast in August, its Monetary Policy Committee was likely to conclude that the risks of more persistent inflation have intensified, the note said. “This means getting rates well into restrictive territory, and quickly,” Nabarro said. “Should signs of more embedded inflation emerge, we think Bank Rate of 6-7% will be required to bring inflation dynamics under control. For now though, we continue to think evidence for such effects are limited with increases in unemployment still more likely to allow the MPC to pause around the turn of the year,” he added.The BoE announced a rare half percentage-point interest rate increase earlier this month and investors expected another big move when the MPC makes its next scheduled monetary policy announcement on Sept. 15.Nabarro said he expected Britain’s retail price index – which is used to set the return on inflation-linked bonds – would peak at over 20%. More

The writer is a senior fellow at the Institute for GovernmentOne casualty of Covid was the UK exam season, which was cancelled for two years due to lockdowns. A-level grades were set by schools instead, with little external moderation and, unsurprisingly, shot up, meaning a lot more young people than usual found themselves at highly selective universities. This year, the government began the painful job of resetting and deflating the system. Inevitably, that meant more missed university offers, causing angst for students and parents caught up in the mess. It’s important to remember, though, that the post-Covid resumption of this annual bunfight over places at the most selective or “high-tariff” institutions predominantly affects only a small portion of society. Around five times more students from the highest-income quintile will end up at these high-tariff universities, with all the future benefits that brings, than will make it from the lowest income one. A comprehensive overview from the Institute for Fiscal Studies earlier this month showed just how embedded social inequality is in the education system. There has been virtually no change in the school “disadvantage gap” between children on free school meals and their peers in the past 20 years. The belief that education can somehow “fix” inequality seems unfounded. That doesn’t mean education policymakers shouldn’t consider inequality in their decisions. It’s certainly possible to make society even less fair by making it easier to buy access to premium institutions. We can see this in the remaining parts of the UK with grammar schools, which are dominated by the children of parents who can afford tutors, and where those from low income families do particularly poorly. And, of course, we see it with the ongoing power wielded by those who have been educated privately. Moreover, as the IFS point out, the funding system for English schools has become significantly less progressive over the past decade and the adult skills system is a mess, all of which makes it harder to mitigate inequalities. Austerity has also taken its toll: the financial gap between private and state schools has doubled since 2010. But even if there was, as there should be, an entirely comprehensive system, funded at a substantially higher level, it would not come close to fixing inequality.For a start in a free, liberal society it is not possible or desirable to prevent parents doing whatever they can to support their children, and inevitably those with more resources will find ways to play the system and gain advantage. The UK is not going to follow China in attempting to ban private tuition. It’s also the case that any improvement in state schools will benefit all pupils, rich and poor. Overall, the school system has got better over the past few decades, but the disadvantage gap has stayed the same. We can hardly expect schools deliberately to withhold support from better-off students.Politicians, from all parties, love the idea that education is the answer to inequality. It’s intuitively plausible, appeals to those who see personal merit and hard work as the primary cause for differences in wealth, and avoids having to talk about the real problems. But the reality is that states can only meaningfully reduce inequality by providing substantial financial support to those who need it, through either the welfare system or labour market interventions. The most equal countries in the world are not those with the best education systems but those with more redistributive social policies.At the moment, financial support in England is getting less generous. Arbitrary benefits caps introduced by the government in 2016 are combining with an inflationary crisis to push ever more people into very deep poverty and destitution. It is ludicrous to expect schools to salvage a situation in which children are going hungry and cold in overcrowded, dilapidated housing. If, as a society, we genuinely care about reducing poverty, we have some obvious levers to pull that we are choosing to leave untouched. None of this means that education is not vital to society and the economy. Under-investment, particularly in upper secondary and tertiary vocational education, is one cause of the UK’s multi-faceted productivity challenge. A better-educated citizenship is a noble goal that brings many benefits to a society. But, once a country has moved past full access to schooling, education will do little to reduce inequality if all the main drivers of that inequality are left in place. Pretending it can do so is preventing us from acknowledging what really needs to change. More

Investing.com — China eases monetary policy once more, Europe suffers from more gas supply worries, while an Iranian nuclear deal could be on the verge of being agreed upon, weighing on the price of oil. U.S. stocks are set to open sharply lower, and Tesla lifts the price of its advanced driver assistance system. Here’s what you need to know in financial markets on Monday, August 22.1. China steps up easingBeijing is clearly worried about the slowdown in the Chinese economy.The People’s Bank of China lowered its one-year loan prime rate by 5 basis points to 3.65% at the central bank’s monthly fixing on Monday, while the five-year LPR was cut by 15 basis points to 4.30%.This followed last week’s surprise decision to lower two other benchmark interest rates.China’s economy, the world’s second-biggest, narrowly avoided contracting in the second quarter, but widespread COVID-19 lockdowns and a property crisis are weighing heavily on consumer and corporate confidence.Influential investment bank Goldman Sachs last week cut its full-year GDP growth forecast for China to 3.0% from 3.3% previously, far below Beijing’s official target of around 5.5%. 2. Gas stoppage to exacerbate European energy concernsEurope’s energy woes intensified after Gazprom (MCX:GAZP) announced late Friday it will stop delivering natural gas to Europe through its main pipeline for three days at the end of the month, further squeezing energy supplies.This resulted in the Dutch front-month gas contract, the European benchmark, soaring 11% higher to 270.98 euros a megawatt-hour, up further from Friday’s record closing high.The supply of gas through this pipeline has been the subject of much concern for weeks after Gazprom closed the flow down for maintenance work last month. It had subsequently resumed at just 20% of capacity, and European authorities have repeatedly warned of the possibility of a complete shutdown as the Kremlin retaliates for sanctions imposed because of its war in Ukraine.Many European countries, and Germany in particular, are struggling to fill storage sites ahead of winter, and have been urgently seeking out alternative sources of power.3. Stocks set to drop; Palo Alto, Zoom to reportU.S. stock markets are set to open sharply lower Monday, with investors nervous ahead of the Federal Reserve’s eagerly-awaited Jackson Hole economic symposium.By 06:00 ET (10:00 GMT), Dow Jones futures were down 300 points, or 0.9%, S&P 500 futures were down 1.2%, and Nasdaq 100 futures were down 1.5%. The main Wall Street indices all closed lower Friday, halting the summer rally on fears that the recent hawkish tone from a number of Fed policymakers will translate into the continuation of more aggressive interest rate hikes, potentially with another 75-basis-point increase in September.The blue-chip Dow Jones Industrial Average dropped almost 300 points, or 0.9%, on Friday, the broad-based S&P 500 fell 1.3%, and tech-heavy Nasdaq Composite closed 2% lower.Fed Chairman Jay Powell is set to speak in Jackson Hole, Wyoming on Friday, and investors will be looking for possible answers about how high U.S. interest rates may go and how long they will need to stay at elevated levels to bring inflation back under control.On a corporate note, Palo Alto Networks (NASDAQ:PANW) and Zoom Video Communications (NASDAQ:ZM) are set to report results after the bell Monday, while Tesla (NASDAQ:TSLA) will also be in the spotlight after lifting the cost of its advanced driver assistance system [see below].4. Tesla lifts premium driver assistance system priceThe price of Tesla’s Full-Self Driving system, its top-level driver assistance program, is set to rise by 25% to $15,000 from $12,000 in September, CEO Elon Musk said, in a tweet on Sunday.Tesla’s advanced driver assistance system has a feature called “Navigate on Autopilot”, which is intended to let Tesla cars automatically detect and slow down for traffic signs and signals; navigate from highway on-ramp to off-ramp while engaging turn signals; make lane changes and take exits.Since 2016, the NHTSA has opened 38 probes into collisions, including 19 fatalities, that involved a Tesla vehicle where driver assistance systems including Autopilot and more advanced systems were thought to be a factor. 5. Iran nuclear deal ‘imminent’ Oil prices weakened Monday on reports indicating that a deal reviving a nuclear agreement between Iran and the Western powers was close to being signed off.Qatar news organization Al Jazeera reported over the weekend that such a deal was ‘imminent’, while the White House confirmed that the leaders of the United States, Britain, France, and Germany discussed the plans over the weekend.These fraught negotiations have lasted for more than a year and the market may be getting ahead of itself, especially after Iran’s Foreign Ministry spokesman on Monday accused the United States of “procrastinating”.However, an agreement could result in the release of over 1 million barrels of oil per day of supply into the market if the sanctions on Iranian oil are pulled.By 06:00 ET, U.S. crude futures were down 0.6% at $89.84 a barrel, while Brent crude was down 0.75% at $96.27 a barrel. More

SEOUL (Reuters) – South Korea will review whether to file a complaint at the World Trade Organization (WTO) over the U.S. Inflation Reduction Act, citing possibilities that the new law could violate WTO rules and a bilateral free trade deal, South Korea’s industry minister said on Monday. The law signed last week by U.S. President Joe Biden excludes electric vehicles (EVs) assembled outside North America from tax credits in the United States. More

The euro slumped back to parity with the US dollar and European stocks dropped as surging energy prices heightened fears that region’s big economies would slide into a recession. Europe’s regional Stoxx 600 lost 1.2 per cent, while Germany’s Dax fell 1.7 per cent. The euro dropped 0.4 per cent to $0.99, slipping below the $1 threshold again after reaching parity with the greenback in July for the first time in two decades.Those falls came as German baseload power for next-day delivery — a key regional barometer — surged as high as €603 a megawatt hour, an all-time record, after Russian state-owned company Gazprom on Friday said it would shut down the key Nord Stream 1 gas pipeline to Europe between August 31 and September 2 for repairs.European gas prices also jumped on Monday, with futures contracts for delivery next month linked to TTF — the continent’s benchmark wholesale price — adding 10 per cent to €281 a megawatt hour.Investors and economists are concerned soaring energy prices will crimp business activity across the region. A survey released last week showed that German investors are the most worried about the eurozone’s powerhouse economy than at any time since the eurozone debt crisis a decade ago. “Governments are starting to share higher energy costs with consumers, and firms will have to start slowly curtailing production, while supply lines are being hit by a lack of transport options on the lower water levels on the river Rhine,” said Jordan Rochester at Japanese bank Nomura. Investors were on Monday also looking ahead to the Jackson Hole symposium of US central bankers taking place later in the week, searching for clues about how aggressively the US Federal Reserve will lift borrowing costs to rein in inflation.The annual conference, which is hosted by the Kansas City Federal Reserve and which begins on Thursday, is often used by the US central bank to make announcements on its policy stance.“I wouldn’t bank on Powell giving a strong signal at Jackson Hole that he’s ready to change direction on inflation,” said Joost van Leenders, senior investment strategist at Van Lanschot Kempen. “[He’ll] justify why they are raising rates so fast and why they have to.”In debt markets, the yield on Germany’s two-year Bund, which closely tracks interest rate expectations, lost 0.05 percentage points to 0.77 per cent as the price of the instrument rose. The benchmark 10-year yield slipped 0.04 percentage points to 1.19 per cent. The yield on the 10-year US Treasury note slipped 0.04 percentage points to 2.95 per cent.Elsewhere, mainland Chinese shares bounced on Monday after the People’s Bank of China slashed its mortgage lending rate for the second time this year, in an effort to support its debt-laden real estate sector. The CSI 300 gauge of Shanghai and Shenzhen-listed stocks rose 0.7 per cent. More

UK inflation is on course to hit 18.6 per cent in January — the highest peak in almost half a century — because of soaring wholesale gas prices, according to a new forecast from Citigroup based on the latest market prices. The investment bank predicted that the country’s retail energy price cap — which limits how much households pay for heating and electricity — would be raised to £4,567 in January and then £5,816 in April, compared with the current level of £1,971 a year. It added that the shifts would lead to inflation “entering the stratosphere”. “We now expect CPI inflation to peak at over 18 per cent in January,” said Benjamin Nabarro, chief UK economist at Citi. That would be higher than the peak of inflation after the second Opec oil shock of 1979 when CPI reached 17.8 per cent, according to estimates from the Office for National Statistics. Such a rate of inflation would squeeze household incomes hard and further push the UK economy into recession, but Nabarro said the scale of the likely inflation would push the Bank of England to tighten monetary policy further. UK and European wholesale natural gas prices are already trading at close to 10 times normal levels and other forecasters have also raised their inflation predictions.Goldman Sachs and EY said they expected an inflation rate of at least 15 per cent around the start of next year and the Bank of England said this month that inflation would exceed 13 per cent towards the end of the year. The energy regulator Ofgem will on Friday announce the energy price cap for the period between October and January, which most analysts expect to rise to more than £3,500 for a household with average usage of energy — an increase of 75 per cent on current levels. Based on the latest wholesale costs, Citi expects a higher figure for the fourth quarter of £3,717 with forecasts for 2023 looking to be “substantially greater”. Nabarro said Citi’s new forecasts had taken account of a 25 per cent increase in wholesale gas prices last week and a 7 per cent rise in wholesale electricity prices.“Even with the economy softening, last week’s data reaffirmed the continued risk of pass through from headline inflation into wage and domestic price setting could accelerate,” he said.

The rate of inflation has exceeded expectations in most months of this year as price rises have spread through the economy. The ONS said it stood at 10.1 per cent in July, the highest level in more than 40 years and the highest rate among G7 countries. With the energy squeeze likely to intensify, the candidates for the Conservative party leadership have focused their fire on each other’s plans to support households ahead of Ofgem’s announcement on Friday. Allies of Liz Truss, the frontrunner, said she was likely to introduce a package of support alongside tax cuts in an emergency Budget in September and that would not be accompanied by independent economic forecasts from the Office for Budget Responsibility because it would be a limited event. Her rival Rishi Sunak’s team has criticised this approach, saying, “Truss cannot deliver a support package as well as come good on £50bn worth of unfunded, permanent tax cuts in one go”. More